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Fitch sees Malaysia 2009 NPL ratio “above 6.5%”

Posted on: March 19, 2009


Reuters – Thursday, March 19

KUALA LUMPUR, March 19 – Fitch Ratings expects Malaysian banks’ non-performing loan ratio to rise by more than 2.5 percentage points this year, the agency’s senior director of financial institutions said on Thursday.

“In particular we are expecting higher delinquencies within consumer loans, that’s a large component of Malaysian banks, in light of a worsening unemployment scenario,” Ambreesh Srivastava told a conference.

“We expect NPL ratios to go beyond 6 to 6.5 percent from just about 4 percent at end ’08,”

He said Malaysian banks’ asset quality will deteriorate due to the economic crisis, but this will be mitigated by the recent interest rate cuts and fiscal stimulus measures announced by the Southeast Asian country.

“On balance the capital buffer and the fact that we don’t expect asset quality to blow out over the next nine to 12 months basically gives us confidence to still maintain stable outlook on our ratings for Malaysia ,” said Srivastava.

He cited the example of Malaysia’s top lender Maybank <MBBM.KL>, which had been placed on a rating watch that was removed after the announcement of a capital raising exercise.

“We do expect Malaysian banks, at least the larger ones, to come out of this crisis without significant damage,” said Srivastava.

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